11 January 2021

1) Boeing Aircraft Co. has reached a $2.5 billion dollar agreement to settle the criminal charge that it defrauded the U.S. government by concealing information about the troubled 737 MAX. This is the ill-fated jet airliner involved in two fatal crashes that killed 346 people. The airline manufacturer entered into a deferred prosecution agreement and in turn, the Justice Department will dismiss the charge against Boeing. This settlement caps a two-year criminal investigation into the two MAX crashes. This settlement will have no bearing on any pending civil litigation. In addition, Boeing will pay a $243.6 million criminal penalty. With the penalty and the fund for relatives, Boeing says it expects to pay an additional $743.6 million dollars for the fourth quarter of 2020.

2) The cryptocurrency Bitcoin is at an all-time high in 2021, one coin now worth $36,000. It has doubled its value in 30 days. Bitcoin is the first and biggest cryptocurrency, which started up in January 2009, and eleven years after its invention, the total value of all Bitcoins in the world is around $359 billion. The Bitcoins are long, unbreakable codes stored in clouds or computers. Bitcoins were invented at the height of the 2008-9 financial crisis. The idea is a type of money that didn’t depend on the traditional banking systems. Cryptocurrency is popular in countries with inflation.

3) Venture capital backed companies in the United States raised nearly $130 billion dollars last year, setting a record despite the COVID-19 pandemic, up 14% from 2019, while the number of deals is down 9% to 6,022. The so-called mega-rounds, which are deals that are $100 million dollars or higher, also hit a record amount and number, with $63 billion dollars raised in 318 deals. However, there is a big drop in the very early stage investment called the seed money stage. The trend of big investments doesn’t look like it will slow in 2021 as there is a lot of capital chasing investments. It’s expected that 2021 is going to be a banner year for many tech companies.

4) Stock market closings for – 8 JAN 21:

Dow 31,097.97 up by 56.84
Nasdaq 13,201.98 up by 134.50
S&P 500 3,824.68 up by 20.89

10 Year Yield: up at 1.10%

Oil: up at $52.73

23 December 2020

1) The sailing of a Chinese aircraft carrier group, led by the country’s newest carrier, through the sensitive Taiwan Strait, caused Taiwan’s navy and air force to deploy. While this isn’t the first time China’s carriers have passed close to Taiwan, it comes at a time of heightened tension between Taipei and Beijing, which claims the democratically-ruled island as its territory. China says such trips by carriers through the strait are routine, often on their way to exercises in the disputed South China Sea. Taiwan said it sent six warships and eight military aircraft to monitor the Chinese ships’ movements. China has little experience with naval air operations compared to the United States, which has operated integrated carrier battle groups with multiple vessels for decades.

2) Steven Mnuchin, the Treasury Secretary, said that millions of Americans could begin seeing stimulus payments as soon as next week. The stimulus measure is combined with other bills into a giant piece of legislation to include money to fund the government through September 2021 as well as the extension of various tax cuts. The stimulus has $600 direct payments to people as part of the bill, plus $300 in weekly unemployment benefits for 11 weeks.

3) The Justice Department has filed suit against Walmart, alleging they unlawfully dispensed controlled substances through their pharmacies thereby fueling the nation’s opioid crisis. Claims are Walmart pressured its pharmacists to fill opioid prescriptions quickly, thus denying pharmacists the ability to refuse invalid prescriptions. Therefore those pharmacists were knowingly filled thousands of prescriptions that came from ‘pill mills’. The government charges Walmart with failing to detect and report suspicious prescriptions to the U.S. Drug Enforcement Administration, as the law requires, so for years Walmart has reported virtually no suspicious orders at all. Walmart has more than 5,000 pharmacies around the country, but Walmart contends that bad doctors are to blame. Therefore, Walmart filed its own preemptive suit against the Justice Department, Attorney General William Barr and the Drug Enforcement Administration saying the Justice Department’s investigation has identified hundreds of doctors who wrote problematic prescriptions. The company is asking a federal judge to declare that the government has no basis to seek civil damages.

4) Stock market closings for – 22 DEC 20:

Dow 30,015.51 down by 200.94
Nasdaq 12,807.92 up by 65.40
S&P 500 3,687.26 down by 7.66

10 Year Yield: down at 0.92%

Oil: down at $46.80

27 October 2020

1) Oil and gas companies are bringing record level of debt to bankruptcy court, making this year the worst oil bust in decades. Companies have brought $89 billion dollars of debt to bankruptcy court this year, compared to $70 billion during the last oil bust in 2014-16. While fewer companies have gone bankrupt this year, 84 compared with the historical high of 142 in 2016, each bankruptcy filing this year reported significantly higher debt. The average bankruptcy debt per company this year is $1.05 billion dollars so far, almost twice as much as the 2017 level of $576 million. But the worst isn’t over yet, it is expected that another 15 to 21 exploration and production companies will file for bankruptcy by the end of the year, pushing the related debt to more than $100 billion. Although crude prices have climbed back to around $40 a barrel, recovery remains tenuous, since energy bankruptcies was rising before the coronavirus pandemic wiped out global demand for crude and petroleum products such as gasoline and jet fuel.

2) Another tropical storm threatens the Gulf Coast again, as 2020 ties record for most named storms. Tropical Storm Zeta has formed in the western Caribbean and is drifting north promising to unleash wind, heavy rainfall and possible ocean surge as it approaches the U.S. Gulf Coast Tuesday night and Wednesday. The storm is most likely to come ashore on Wednesday at tropical-storm level or possibly as a hurricane. The landfall zone includes areas in Louisiana where hurricanes Delta and Laura hit as well as parts of Alabama hit by Sally. The hurricane season still has five weeks left, so the record for most named storms could fall. There are some indications that Zeta could sneak in some last-minute intensification before landfall, possibly becoming a Category 2 hurricane. Zeta’s eventual merger with a frontal system could bring a swath of three to four inches of rain or more into parts of the Southeast and Mid-Atlantic late in the week.

3) Walmart is suing the Justice Department and the Drug Enforcement Administration as a pre-emptive strike, anticipating a legal battle over the retailer’s responsibility in the opioid abuse crisis. Operating more than 5,000 pharmacies in its stores, Walmart says it is seeking a declaration from a federal judge that the government has no lawful basis for seeking civil damages from the company. The government blames Walmart for continuing to fill purportedly bad prescriptions written by doctors that the DEA and state regulators had enabled to write those prescriptions in the first place and continue to stand by today. In 2018, 46,802 people died from an opioid overdose, and health care providers across the country wrote prescriptions for opioid pain medication at a rate of 51.4 prescriptions dispensed per 100 people.

4) Stock market closings for – 26 OCT 20:
Dow 27,685.38 down 650.19
Nasdaq 11,358.94 down 189.34
S&P 500 3,400.97 down 64.42
10 Year Yield: down at 0.80%
Oil: down at $38.64

22 October 2020

1) Many consider the next economic crisis to be the growing profusion of empty retail space, as tenants stop paying rent and reduce their offices, leaving commercial real estate in a pinch. Commercial real estate is in trouble, the $15 trillion dollar market is threatened with decline, and the longer the pandemic persists the more ill effects on hotels, retailers and office buildings, therefore the more difficult it is for property owners to meet their mortgage payments. The widespread downgrades, defaults and eventual foreclosures, coming from companies like J.C. Penney, Neiman Marcus and Pier 1 filing for bankruptcy, has retail properties losing major tenants with nothing to replace them. Motels and hotels are running below 50 percent occupancy, with the stimulus bill having no provisions to prop them up, the government hoping the commercial mortgages will just heal by themself.

2) The Justice Department is accusing the internet giant Google of illegally protecting its monopoly over search and advertising. The company is accused of building an illegal monopoly over parts of the internet. The Justice Department accused Google of building a monopoly over central parts of the internet. The main concern is Google working with other major internet companies to channel the internet to Google’s search engine, as the default search engine, by Google providing the engine to include in other company’s products through exclusive business contracts and agreements. The government contends that Google has used anti-competitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising and general search text advertising which is the cornerstones of its empire. It is considered this will be a major test of the antitrust law. A victory for the government could remake one of America’s most recognizable companies and the internet economy.

3) NASA OSIRIS-REx spacecraft mission has successfully touched down on the asteroid Bennu to bring a rock-soil sample back to earth for analysis. The van-size spacecraft briefly touched down on a landing site the width of a few parking spaces. It collected a sample between 2 ounces and 2 kilograms, then the spacecraft backed away to safety. Bennu is a boulder-studded “rubble pile” asteroid shaped like a spinning top and is as tall as the Empire State Building. If everything runs smoothly, the spacecraft and its prized sample will begin the long journey back to Earth next year and land the sample on Earth in 2023.

4) Stock market closings for – 21 OCT 20:

Dow 28,210.82 down 97.97
Nasdaq 11,484.69 down 31.80
S&P 500 3,435.56 down 7.56

10 Year Yield: up at 0.82%

Oil: down at $40.00

12 October 2020

1) With the recession from the Covid-19 came predictions of waves of bankruptcy filings as businesses, large and small, failed. But that wave of bankruptcy has not materialized, and so far, there’s no sign that it will, indeed bankruptcies are down a little from last year. This is a good sign that companies and households are not as stressed as many economist feared. However, bankruptcy filings aren’t a perfect measure of hardship, with many companies barely hanging on, so bankruptcies may still be coming. Many small businesses and households go bust without ever formally filing for bankruptcy.

2) The four massive high tech companies, Google, Amazon, Apple and Facebook are under investigation at Federal and State levels for antitrust. These investigations are spurred by concerns that competition is being stifled by the domination of these companies, but there are concerns that the big tech is trying to also stifle conservative voices. Google is facing a relatively narrow complaint from the Justice Department that it seeks to disadvantage rivals in search and advertising. The focus on Apple is their apps store with accusations that Apple introduces new products and then put out apps that compete with them. Facebook has raised concerns over how they treat some of their app developers on its platform and therefore engaged in unlawful monopolistic practices. Amazon is suspected of conflict of interest in competition with small sellers on its marketplace platform.

3) Silicon Valley companies are thinking about the future of work taking actions from pay cuts to permanent work-from-home as they strive to cope with the coronavirus crisis. The big tech companies have formed various plans for the future of work. Some companies, (Twitter and Slack), said their employees never need to return to the office, while others, such as Microsoft, are adopting a hybrid model where employees report to the office only a few days a week. Amazon and Salesforce are adopting new benefits to help out working parents, such as subsidized back-up childcare and extended paid leave, while Facebook, employees may work from home permanently. However, if they leave the Bay Area for a less expensive city, they’ll may face a pay cut. Silicon Valley may bear little resemblance to the thriving hub before the pandemic. Tech companies have largely shut down their sprawling campuses and asked employees to work from home — in some cases, forever. When those offices reopen office life is unlikely to resemble the past. Companies may change their real estate plans, opting instead for a new type of office, or none at all.

4) Stock market closings for – 9 OCT 20:

Dow 28,586.90 up 61.39
Nasdaq 11,579.94 up 158.96
S&P 500 3,477.13 up 30.30

10 Year Yield: up at 0.78%

Oil: down at $40.52

5 June 2019

1) The tech giants Apple, Google, Facebook and Amazon are facing antitrust troubles. The government is stepping up scrutiny of these big four with possible new rules, regulations and law suits. The investigative efforts will be split between the Justice Department and Federal Trade Commission driven by mounting criticism over political bias, disinformation and privacy breaches. This could spell years of troubles and law suits and possible breakup of the companies.

2) The threat of tariffs on Mexican imports has American oil refiners worried, since Mexico is the number two source of foreign oil to the United States. American produced oil is a light oil which is a poor match for Gulf Coast refining facilities, while the Mexican oil is a heavy oil that when blended with the America optimizes the refinery’s output.

3) The Medicaid system is still suffering from the Great recession, so there are fears than another recession could be devastating for the system. This is at a time when state spending on Medicaid is still high with no signs of subsiding. In a recession, payrolls decrease from people unemployed or underemployed, so contributions are down. This means less buildup of reserve funds needed for the future, and a second recession so soon, could seriously deplete those reserves quicker, leaving the future of the system in doubt.

4) Stock market closings for 4 June 2019: Jump in Dow comes from Fed signals flexibility on rates.

Dow               25,332.18    up    512.40
Nasdaq             7,527.12    up    194.10
S&P 500            2,803.27    up      58.82

10 Year Yield:    up   at    2.12%

Oil:    down   at    $52.95